Cowtown Angels, a new network of affluent investors in Fort Worth, has invested more than $1.8 million in six startups in less than a year.

In Dallas, entrepreneurs Carl Soderstrom and Clay Heighten have persuaded dozens of angel investors to commit more than $10 million to North Texas health care and tech startups over the last two years.

And Dallas startup Connectloud raised millions of dollars from angel investors in the Dallas-Fort Worth region.

These examples, say local investors and entrepreneurs, represent an uptick in angel investment in North Texas a couple of years after economic turmoil kept many wealthy individuals on the sidelines.

“You could tell guys are there to open their pockets,” said Kevin Vela, a Dallas attorney and co-founder of the Dallas Angel Network. “For a long time, there were tire kickers.”

The rebound in seed and early stage private investment is good news for North Texas, which has seen a steady decline in venture capital funding in recent years. An active angel market is also an important feature of a robust startup ecosystem.

“I think we in Dallas are beginning to see signs of various types of angel investment coming to be here,” said Scott Ticer, Dallas serial entrepreneur and co-founder of Lone Star Angels. “Is it filling the gap of past venture capital activity? No way. We’re not even close in the amount of money being put to work or the number of deals, but I think the trend is what’s important. It’s up.”

Angel investment is critical for young companies because it is typically the first capital outside of that provided by friends and family.

Angel investors are mostly wealthy individuals who put up their own money in risky startups and young companies that can’t get bank funding and are too young for venture capitalists.

In contrast, venture capitalists raise money from other investors to fund later-stage companies.

In both cases, investors typically get equity in the company in exchange for their money.

Connectloud

Consider Connectloud, a technology startup based in Dallas.

The cloud startup, which has yet to launch a product publicly, was able to tap into the wealth in Dallas by demonstrating its “value proposition,” CEO Zee-shan Naseh said.

In just two months, Connectloud raised $3.6 million, mostly from angel investors in the Dallas area. The fundraising process was “faster than if we had gone to the VC community,” Naseh said.

“Having independent and angel investors supporting entrepreneurs in the initial round of funding is critical,” said Naseh, a former Cisco executive who helped build the technology company’s cloud services business.

The angel market nationwide began recovering from the recession in 2010.

Last year, total investments were $22.9 billion, up nearly 2 percent from 2011, according to the Center for Venture Research at the University of New Hampshire. Statewide angel investment figures were not available.

In Texas, there are several formal angel networks as well as family offices and individuals who invest in startups and young companies. Overall, angel investors say they’re seeing startups that have established market validation, secured customers or generated revenue.

The nine members of the nonprofit Alliance of Texas Angel Networks collectively invested more than $20 million in 60 startups last year, said Fred Marxer, a founding board member.

The alliance was created in 2011 to attract more investors and make larger investments together, Marxer said. Members include Fort Worth’s Cowtown Angels, the North Texas Angel Network and the Baylor Angel Network.

Central Texas Angel Network, another alliance member, was the fourth most active angel group in the country last year, according to the Halo Report, a national survey of angel group investment activity.

Besides traditional angel groups, North Texas has seen an increase in accelerators injecting seed money into startups. Tech Wildcatters and the newly formed Health Wildcatters, for instance, are backed by many angel investors.

Soderstrom and Heighten invested in Health Wildcatters as co-founders. Both Health Wildcatters and Tech Wildcatters are part of their investment portfolio of nearly two dozen startups. Health care-related IT represents 70 percent of the portfolio while the rest is technology.

High-risk component

In 2011, the two entrepreneurs created Green Park & Golf Ventures to invest in mostly health care tech startups after they sold Dallas-based Medical Edge Healthcare Group. The large health care provider group was acquired by Texas Health Resources in a deal the two companies described at the time as the country’s second-largest acquisition of an independent physician practice.

Since then, the two men have invested their own money as well as persuaded others, many of whom are first-timers, into backing startups that are riskier but come with potentially higher returns.

“Dallas loves real estate and oil and gas deals, so you go to people with money and say, ‘You know what, I actually think it would really be a good investment for you to take 5 percent of your money and have it in a high-risk component of your portfolio,’” Soderstrom said. “I really believe with my own money in the strategy of investing in multiple early stage companies.”

Darlene Ryan, executive director of incubator Tech Fort Worth, was surprised by the interest Cowtown Angels generated when it formed in September. The angel network is a program of the technology incubator, which manages the investment process. Members of Cowtown Angels make individual investment decisions.

Ryan was hoping to attract five members, but by the end of the year, Cowtown Angels had 12. Today, the network has 20 members and several more considering joining, Ryan said.

‘Pent-up demand’

Ryan believes there is “pent-up demand” for solid investment opportunities, given the low interest rates and an uneven stock market recovery.

Cowtown Angels’ investments have ranged from $125,000 to $620,000. Most of its startups are based in the Dallas region or elsewhere in Texas.

Having more angel investors, either through formal networks or otherwise, “opens up more opportunities for entrepreneurs to get their early-stage companies funded and started,” Ryan said.

“The mere existence of them and the fact that these groups are investing and being more visible, it may prompt more entrepreneurs to take the leap,” Ryan said.

Tyler Head, a member of Cowtown Angels whose firm Corbett Capital has made several investments, said he’s seeing an increasing desire among angels to help build a strong entrepreneurial community in the region.

“There is a push in Fort Worth to attract entrepreneurs to this town and keep them here if they’re already here so that there’s an ability to raise funds in the city rather than going to another city like Austin or move to California,” Head said.